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Price stability

Updated: Aug 20, 2021

An objective of economic policy aimed at avoidance of both prolonged inflation and deflation. It amounts to maintaining the rate of increase or decrease in an aggregate price index, usually the consumer price index, within tolerable limits. For example, the European Central Bank defines price stability as ‘a year-on-year increase in the Harmonized Index of Consumer Prices for the euro area of below 2%’ over the medium term.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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